Author: Lecturer.Hamad jasem Mohammed Al- Khazraji
Center for strategic studies/ crisis managment Department
Translated by: Hiba Abbas Mohammed Ali
Reviewed by: Assistant Lecturer. Hussain B Abdulameer
On 8 May 2018 US president announced the withdrawal of the United States from the Iranian nuclear agreement signed between Iran and the 5 + 1 countries in 2015, which was approved by the US during the administration of President Barack Obama, President Trump also imposed economic sanctions on Iran and on countries and companies dealing with Iran, which has exacerbated the economic situation of Iran and left to live in a severe economic crisis, through the devaluation of the Iranian currency and loss of more than 80% of its value against the dollar, and Iran has seen a series of protests against rising prices, and accusations of corruption to some officials, while some western and southern cities have seen shortages of drinking water.
The reason for the cancellation of the nuclear deal by US President Duland Trump was that the views that encouraged the Obama administration to sign the agreement with the Europeans, Russia and China were supposed to put an end to Iran’s nuclear activities and stop Iranian interference in the region. But the shortcomings of this agreement that it did not include ballistic missile programs, especially long-range missiles of the type (Shehab), which may reach the Zionist entity and southern Europe, and threaten the interests of America in the Gulf, and did not limit Iran’s interference in Syria, Lebanon and Yemen, which gave the Iranian Revolutionary Guards an opportunity to move in the region through supporting the Syrian government and Hezbollah in Lebanon and Yemeni government in Sanaa, which is run by the Houthis and the General People’s Congress party, which is considered by President Trump that it is inappropriate agreement for America and call to new negotiations with Iran to reach a new agreement, which is rejected by Iran that is adheres to the previous agreement and is considered an international agreement that President Trump has no right to cancel it from one side.
the growing internal crisis is the greatest concern of the Iranian regime in the current period, not the American administration, as many see, and that the impact of the diplomacy of US President (Donald Trump), through the arena of social communication can be easily responded by Iranian officials, but the impact of sanctions on the Iran’s interior is most important, especially since these problems and economic crises have existed for decades in Iran and cannot be blamed by the regime on America only, and that these US sanctions were a factor to detect the deterioration of the Iranian economy.
The deterioration of the economic situation in conjunction with the imposition of new US sanctions on Iran led to several demonstrations and protests in Iran, it’s reasons are whose causes are:
- The rise in prices of basic commodities, especially foodstuffs, the prices has doubled as the government has not increase wages and salaries.
- The high unemployment rates, which reached a high rate compared to previous years, as confirmed by the Iranian statistical center due to the stopping of number of factories and companies in Iran.
- Rising inflation rates and reaching high rates, as a result of the devaluation of the Iranian currency against other currencies, as the nuclear agreement and the lifting of economic sanctions have not led to a decline in inflation at the required pace.
- The foreign government policies seen by some Iranians have harmed Iran and led to the deterioration of the Iranian economy.
The US economic sanctions have resulted in several negative results on the internal situation of Iran, which it is a goal sought by America to achieve what it seeks, including:
- Stir up young Iranians: The current generation of young people who did not contemplate the Iranian revolution, became an open generation no longer afraid of the government power, where some media reported that the manifestations of personal freedom began to appear in the Iranian street, both young men and women, which is a kind of challenge to the religious authority in Iran.
- Attempts to stir up disputes between Iranian institutions: By dismissing a number of officials in Iran after the backdrop of the deterioration of the Iranian economy and the devaluation of the Iranian currency,in July 2018 the Iranian President Hassan Rowhani deposed the governor of the Central Bank “Walee allah saif” for mismanagement during the course of the necessary in Iran and his financial policies which had negative consequences on the currency exchange, and appointed “Abdel Al-Nasser Hamati” Instead of him. On August 8, the parliament voted in favor of dismissing Labor Minister “Ali Rabie”. Parliament voted on August 26 to dismiss Minister of Economic and Financial Affairs “Massoud Karbassian” from his position with 137 deputies to remove Karabasian, compared to 121 deputies who voted for him to remain in his position.
- Trying to subjugate Iran to American dictates: America and the Trump administration are seeking by economic sanctions to force Iran to renegotiate with the US over the nuclear deal, to recognize US demands to halt the missile program, and to stop Iran’s intervention in the region.
- Increasing the suffering of the Iranians: The US sanctions will increase the daily distress experienced by Iranian citizens, especially through the collapse of the value of the Iranian riyal, which reached record levels never seen before, which increases the poverty of some layers of Iran, especially workers with daily wages and some earners and shopkeepers of small traders, which made some Iranians carrying the government of President Hassan Rowhani the responsibility for the current situation, and the president has been questioned in the Parliament to find out the reasons for the deterioration of the economic situation.
- Stir up Iranian minorities: Despite the deterioration of the economic situation included most of Iran’s cities, but the cities that are most affected by the sanctions are located in the areas of the outskirts of Iran, which are suffering from low economic levels and weak development and the lack of economic projects, such as the cities of Khuzestan, Baluchistan and Kurdistan, some of them started suffering from poor services, including water shortages, put them in cities that may witness popular protests, especially as cities such as Khuzestan and Abadan, including the largest fields and factories of oil and gas in Iran, while it’s people suffering from unemployment and poor services.
- Push the Iranian bazar: In a dangerous precedent in Iran, some of the bazaar owners began to demonstrate, some news agencies reported that shops in Tehran “Grand Bazaar” were closed as a response for an invitation from traders to strike by traders in protest against the deterioration of the value of the national currency. And denouncing the economic policies that led to a significant rise in the prices of basic commodities, which is a step reminiscent of the days of the Iranian revolution and the role of the bazaar.
- Stirring up Iranians against the foreign policy of the government: Some voices in Iran are calling for the disclosure of the fate of the money being diverted to fund the war in Syria, Lebanon and Yemen. They demanded that it have to be spent on modernizing the country. This is what America wants from its sanctions against Iran and pressing on it to withdraw from the Middle East crises.
- Gain it’s allies amiability: impose sanctions also means gain the support of the countries of the regain (Arab Gulf States) to Washington’s policies and push it to provide it with financial support through arms deals or direct financial support, as well as to reassure its main ally the Zionist entity and to remove any potential threat toward it.
Despite the sanctions and its effects on the Iranian economy, but there are a number of policies, whether governmental or international, which were supportive of Iran in the face of sanctions, including:
- The Iranian government has sought to strengthen the industrial sector to provide local needs by providing facilities for domestic and foreign companies wishing to invest in Iran.
- The European Union has not go out: There was no other countries has joined the American declaration, so the agreement in its content is still going on, and what matters is the continuation of the UK, France and Germany, to be obligated of the agreement with Iran, and we can expect some consequences in the short term will affect the decision of the three states, such as increase regional stability and security in the Middle East, and increase pressure by the United States on the EU, the improvement in the trade balance of Iran, the increasing presence of European banks in the Iranian economy, more foreign investment, more tourists from Europe to visit the country, and in the case of commitment by the leading European economies in the Iranian market there will be more foreign investment can be expected and the implementation of contracts and trade agreements or most of them at the very least. In these circumstances, Iran’s renewable energy sector will develop, and in addition, technology transfer will occur in the oil and gas sector. These energy projects will stimulate the growth rate of the Iranian economy, and the main objective of the EU to stay in the Iranian nuclear agreement, is to strengthening regional stability and security. The more political and military tensions on the one hand, the more the EU and its interests in the region will be affected, including in Iran, so the EU will have to spend more to save the deal and keep a low ceiling of tension with the United States.
- Iran’s orientation towards Russia and some East Asian countries as key partners in trusted trade with Iran. Both China and Russia have confirmed their intention to continue cooperation with Iran, especially in their oil investments. Iran’s foreign trade statistics show, that China is the largest exporter to Iran with 4.8 billion dollars, as well as the largest buyer of Iranian goods, worth 3.744 billion dollars, and China remains a major buyer of Iranian oil. Mohammad Mustapwe, head of investment in the Iranian National Oil Company, said in his remarks, that after the withdrawal of Total French participation with China’s CNPC and Petropars of Iran to develop the 11th phase of the South Pars field, the Chinese company raised its stake to %80.1 in evidence of China’s continued strong oil activity in Iran.
- Iranian President Hassan Rowhani and his foreign minister have given more than a clear signal to work on consolidate and strengthen the relationship with Gulf Arab states, especially Saudi Arabia and the UAE, as well as with other countries such as Pakistan and India.
Some observers of developments in this crisis believe that things may go in two directions :The first is that the US administration may retreat and return to the nuclear agreement provided a new negotiations between the international community and Iran on other files such as the missile program and other regional affairs, which may open a window for new Iranian-US negotiations, especially after the Iranians refused any new negotiations with the US led to a rupture of US policy toward Iran.
The other scene may include an attempt to impose a blockade on Iranian oil exports, which foreshadows the outbreak of an Iranian-American war that will affect the entire region, especially after Iran’s threat that it will stop exporting all the oil of the region if an oil embargo is imposed on it. This scene is far from realistic and can not be achieved on the ground, because it will lead to disaster in the region.
In summary, Iran’s success in confronting current and future US sanctions depends on its success in confronting corruption, strengthening internal economic management, consolidating internal ranks, increasing public awareness and increasing cooperation with the government to face this stage.
